9 ms·

What is their current valuation? I wondered if google or microsoft would buy them, amazon can't due to anti-trust issues, but the others might be able to.

eropple 7y ago
I don't think adding something the size of DO (which is not large) to AWS would materially impact anti-trust evaluation of Amazon.
- peteradio 7y ago
  Something will break the camels back. Can only pack so many straws.
wcarron 7y ago
Crunchbase estimates $500M-$1B range https://www.crunchbase.com/organization/digitalocean#section-post-money-valuation-data-by-privco https://www.crunchbase.com/organization/digitalocean#section...
deleted 7y ago
[deleted]
hamandcheese 7y ago
I don’t see why they would except maybe to aquihire some talent.
- ticmasta 7y ago
  If they are successful in a particular segment an acquirer could look to just buy that part of the market rather than earn it organically
- brianbreslin 7y ago
  That's why it might make more sense for a second or third place cloud provider to catch up. I would love for AWS to adopt the DO interface.
- service_bus 7y ago
  More datcenters / infrastructure I would imagine. They seem to have some regions running at near capacity already.
toomuchtodo 7y ago
Would likely be a private equity leveraged buy out transaction, someone who leans out the operation and squeezes the margins up. Anyone with tech chops has their own cloud, and DO isn’t even cash flow positive yet. Thoughts and prayers to anyone with common stock (which isn’t looking too good at an exit).
- raiyu 7y ago
  Thanks for your thoughts and prayers but no one is selling the business or nor are we looking for someone to buy it. Debt is a normal way to fund a high growth up front capital intensive business and it is cheaper than equity because you aren't giving away parts of your company to do so. If you look at AWS which is many times larger than we are they are also using debt to fund their continued expansion. It's under capital lease obligations and there are quite a few write-ups that detail how much exposure they have, but it's in the billions.
  - toomuchtodo 7y ago
    Appreciate the reply Moisey. I don't disagree that debt is a normal way to fund a business; arguably, it is the best way to fund a business once the business has been derisked. As you mention, you're not suffering dilution to get access to the capital, and as long as you're able to generate a multiple of value using that debt, you should take it on. My comment communicates pessimism about the value that debt will be able to generate (I'm not debating the present value already inherent in the business, that's already obvious and proven based on revenue). The argument breaks down when you compare DO to AWS; DO isn't in the same class as AWS, Azure, or GCP. These are top tier cloud providers; not only do they have access to capital markets (or firehoses of profit from other business lines) at terms most startups could only dream about, they have world class sales, account management, and technology teams. They are able to generate an immense amount of value from the leverage they're obtaining with their available capital resources. I agree there is growth left for DO, but not at the same rate as the cloud providers I mentioned, and the growth remaining is the value up for discussion when considering 1) what DO has already raised in equity and debt and 2) current and forward looking revenue. It's kind of a moot point: if I'm wrong, you still end up wealthy. If I'm right, I get...internet points with no value. I hope your common shareholders are able to realize upside from the value they've created (I have friends who worked at DO), but I'm not optimistic based on how common shareholders make out, historically, in venture backed orgs. This is my chief concern: common shareholders (who put their most precious resource, their time, into the business) getting blown away because an org overextends itself attempting to reach an unattainable target.
capableweb 7y ago
I'm interested to hear how the reasoning is behind thinking that Amazon would be hit by any anti-trust issues and not Google or Microsoft. As far as I know, all three of them are in the cloud/hosting business.
- djsumdog 7y ago
  With all the mergers we've seen in the past 20 years, with Facebook literally buying all of its major competitors, I highly doubt the SEC would stop a buy out of Digital Ocean from any of these three providers. I doubt any of those providers would want DO. Unless they just want to buy the developers, they're not going to get the customers unless they provide some type of automatic migration pattern where yesterday everything was a Digital Ocean Droplet and DO LoadBalancer and hosted database and today we've magically and transparently migrated all of that to EC2, ELBs and RDS. It's easier to just market to the customer base and get them to migrate their stuff on their own.
- toast0 7y ago
  Google and Microsoft don't have a dominant market position in cloud hosting; and their other dominant positions don't seem to be impacting the cloud marketplace (well, maybe Microsoft is doing some tying)
  - wu_187 7y ago
    Google and Microsoft actually do have dominant positions in cloud hosting, just not in the "traditional" sense of webhosting.
- wmf 7y ago
  #1 buying #4 looks very different than #3 buying #4. (Think about AT&T & T-Mobile vs. T-Mobile & Sprint.) But I agree that DO has little or nothing to offer Google/MS.
jermaustin1 7y ago
I hope no one will. DO is my preferred IaaS-type product. Its beyond simple, its fast, and they don't grow their features faster than I can keep up.
hinkley 7y ago
Due to anti-trust issues, Amazon probably wants DO to stay independent. There are several dimensions in which you benefit from your competitors doing well, but not too well. Getting funding as a startup is another. If you are alone in your vertical nobody wants to talk to you. If you have competition, well, then you must be doing something interesting.

eropple 7y ago

I don't think adding something the size of DO (which is not large) to AWS would materially impact anti-trust evaluation of Amazon.

peteradio 7y ago
Something will break the camels back. Can only pack so many straws.

wcarron 7y ago

Crunchbase estimates $500M-$1B range https://www.crunchbase.com/organization/digitalocean#section-post-money-valuation-data-by-privco https://www.crunchbase.com/organization/digitalocean#section...

deleted 7y ago

[deleted]

hamandcheese 7y ago

I don’t see why they would except maybe to aquihire some talent.

ticmasta 7y ago
If they are successful in a particular segment an acquirer could look to just buy that part of the market rather than earn it organically
brianbreslin 7y ago
That's why it might make more sense for a second or third place cloud provider to catch up. I would love for AWS to adopt the DO interface.
service_bus 7y ago
More datcenters / infrastructure I would imagine. They seem to have some regions running at near capacity already.

toomuchtodo 7y ago

Would likely be a private equity leveraged buy out transaction, someone who leans out the operation and squeezes the margins up. Anyone with tech chops has their own cloud, and DO isn’t even cash flow positive yet. Thoughts and prayers to anyone with common stock (which isn’t looking too good at an exit).

raiyu 7y ago
Thanks for your thoughts and prayers but no one is selling the business or nor are we looking for someone to buy it. Debt is a normal way to fund a high growth up front capital intensive business and it is cheaper than equity because you aren't giving away parts of your company to do so. If you look at AWS which is many times larger than we are they are also using debt to fund their continued expansion. It's under capital lease obligations and there are quite a few write-ups that detail how much exposure they have, but it's in the billions.
- toomuchtodo 7y ago
  Appreciate the reply Moisey. I don't disagree that debt is a normal way to fund a business; arguably, it is the best way to fund a business once the business has been derisked. As you mention, you're not suffering dilution to get access to the capital, and as long as you're able to generate a multiple of value using that debt, you should take it on. My comment communicates pessimism about the value that debt will be able to generate (I'm not debating the present value already inherent in the business, that's already obvious and proven based on revenue). The argument breaks down when you compare DO to AWS; DO isn't in the same class as AWS, Azure, or GCP. These are top tier cloud providers; not only do they have access to capital markets (or firehoses of profit from other business lines) at terms most startups could only dream about, they have world class sales, account management, and technology teams. They are able to generate an immense amount of value from the leverage they're obtaining with their available capital resources. I agree there is growth left for DO, but not at the same rate as the cloud providers I mentioned, and the growth remaining is the value up for discussion when considering 1) what DO has already raised in equity and debt and 2) current and forward looking revenue. It's kind of a moot point: if I'm wrong, you still end up wealthy. If I'm right, I get...internet points with no value. I hope your common shareholders are able to realize upside from the value they've created (I have friends who worked at DO), but I'm not optimistic based on how common shareholders make out, historically, in venture backed orgs. This is my chief concern: common shareholders (who put their most precious resource, their time, into the business) getting blown away because an org overextends itself attempting to reach an unattainable target.

capableweb 7y ago

I'm interested to hear how the reasoning is behind thinking that Amazon would be hit by any anti-trust issues and not Google or Microsoft. As far as I know, all three of them are in the cloud/hosting business.

djsumdog 7y ago
With all the mergers we've seen in the past 20 years, with Facebook literally buying all of its major competitors, I highly doubt the SEC would stop a buy out of Digital Ocean from any of these three providers. I doubt any of those providers would want DO. Unless they just want to buy the developers, they're not going to get the customers unless they provide some type of automatic migration pattern where yesterday everything was a Digital Ocean Droplet and DO LoadBalancer and hosted database and today we've magically and transparently migrated all of that to EC2, ELBs and RDS. It's easier to just market to the customer base and get them to migrate their stuff on their own.
toast0 7y ago
Google and Microsoft don't have a dominant market position in cloud hosting; and their other dominant positions don't seem to be impacting the cloud marketplace (well, maybe Microsoft is doing some tying)
- wu_187 7y ago
  Google and Microsoft actually do have dominant positions in cloud hosting, just not in the "traditional" sense of webhosting.
wmf 7y ago
#1 buying #4 looks very different than #3 buying #4. (Think about AT&T & T-Mobile vs. T-Mobile & Sprint.) But I agree that DO has little or nothing to offer Google/MS.

jermaustin1 7y ago

I hope no one will. DO is my preferred IaaS-type product. Its beyond simple, its fast, and they don't grow their features faster than I can keep up.

hinkley 7y ago

Due to anti-trust issues, Amazon probably wants DO to stay independent. There are several dimensions in which you benefit from your competitors doing well, but not too well. Getting funding as a startup is another. If you are alone in your vertical nobody wants to talk to you. If you have competition, well, then you must be doing something interesting.